Saudi Arabia‘s Finance Minister Mohammed al-Jadaan said on Saturday that due to destruction caused by coronavirus to the economy, tough and robust decisions will be taken. He said that to get out of this crisis all options will be considered.
In an interview al-Jadan said that :
- Budget expenses of Saudi Arabia will be cut drastically. He said that this year’s impact of the coronavirus will be more evident in the second quarter of the economy.
- Al-Jadan said that Saudi Arabia’s financial matters will be tightened so that everything remains more disciplined and we will be able to come out of the crisis soon.
- Saudi’s Finance Minister said that Mega Project’s expenses within the country will also be deducted.
Saudi Arabia, the world’s largest oil exporter has faced troubles as global demand of oil has witnessed a historic decline.
How Coronavirus has affected Saudi Arabia
- Foreign exchange reserves in Saudi Arabia’s central bank in March witnessed the fastest drop in 20 years. The last time it was this low was in 2011.
- Saudi Arabia faced a loss of $ 9 billion as the demand for oil fell in the first quarter.
- Jadan said that Saudi Arabi can take a loan of $26billion this year so that the foreign exchange reserves can be kept balanced.
- Saudi Arabia’s monetary authority said that Saudi Arabia’s foreign property has declined by $ 464 billion. This is the largest decline in 19 years. Authorities in Saudi Arabia said that this is due to the coronavirus epidemic.
- Jadan said, “Earlier this year, the price of oil was $ 60 a barrel and today it is $ 20 a barrel. This is a decline of more than 50%.
Saudi Finance Minister Mohammed Al-Jadan said the next step is going to be compensating for the loss.
Saudi Arabia also put a lockdown in most cities to prevent infection. International air services are completely closed. Due to this also Saudi’s non- oil revenue has been badly affected. The people are shut in homes.
What they will do
Saudi Arabia’s Finance Minister Al Jadan said, “As a precaution regarding corona virus all economic activities have been stalled. Apart from oil, other earnings have also been affected. With the help of God’s grace we have to tackle this situation with intelligence and efficiency. We are occupied day and night to find a way out. Things like this have not happened even after world wars. This is something extremely different and serious that the world is experiencing right now”.
He also said that the government will utilise limited funds from its revenue reserves. It will extract only $ 32 billion from its revenue reserves. Instead, the government will use its full capacity to borrow and will take a loan of $60 arab.
He said, “Our plan is to take a 220 billion loan according to the situation”. Al Jadan also said that Saudi government or the rest of the world will not be able to return to the same financial position that was before Coronavirus as coronavirus has adversely affected all economies, supply chains and economic activities.
‘The steps to be taken will be painful’ – Al-Jadan
Al-Jadan said about the current economic challenges in Saudi Arabia. He said that Saudi’s economic status will largely depend upon the people’s ability to purchase so and that is why they will keep the purchasing power of people balanced.
However, he further said that long lasting steps need to be taken in this direction. He said
- public financial investment needs to be strengthened
“The government has been working in this direction for four-five years and trying to reduce losses. But there is still a lot to be done. He said that Saudi Arabia will try to lower expenses. The steps taken can be painful but it is for the progress of the country and its citizens” he said.
Along with financial investments he also stressed the need to invest in health sector.
He also said that Saudi Arabia is planning to reduce the expenditure on projects. Working under 2030 vision we have been spending on some important projects or on some programs. Decisions and money spent on these projects will be done cautiously.
The Finance Minister said that the government is also considering cutting expenditures on other items. However, the basic services of people will not get affected he said.